Translated material
Revenue contrast
The net profit of Gazprom and NOVATEK in the first half of the year was with different signs
The quarterly reports of the largest producers of Russian gas, Gazprom and NOVATEK, published yesterday, demonstrated diametrically opposed results from the companies. If the gas monopolist in the first half of the year, compared to the same period in 2005, exactly doubled its net profit by Russian standards, the “leader” of independent producers showed a decrease of 17%. Gazprom explains the success by the ongoing boom in gas prices in Europe, a campaign to sharply revise prices for the CIS countries, as well as the indexation of domestic tariffs. NOVATEK prefers not to dramatize the situation. As stated in the report, the above indicators may not fully reflect the performance of the entire group, since they describe the activities of only the parent company.“A true and real idea of the profitability and profitability of the business of the issuer and its affiliated enterprises can be obtained based on the analysis of similar indicators of consolidated statements,” NOVATEK believes. This fully applies to Gazprom’s excess profits, which are likely to be significantly less for the group. However, one conclusion from the figures published yesterday is obvious: the growing dependence of the monopolist's welfare on the situation on foreign markets continues, while the growing costs of the underdeveloped domestic market are increasingly putting pressure on other Russian gas producers.
Gazprom's total revenue according to RAS in the first half of the year increased by 40% - to 827.9 billion rubles, and progressing export revenues made the lion's contribution to this increase - almost 190 billion out of 234 billion rubles. Foreign exchange earnings now account for about 60% of the monopoly’s total income, although at the beginning of 2005 it did not exceed 47%. Revenues from sales on the Russian market increased by 18.61% (due to indexation of regulated prices and volumes of gas sold), revenues from activities in Europe increased by 40.4% compared to the first half of last year, the CIS and Baltic countries increased by 113. 9%. As stated in the Gazprom report, “with an almost constant share of the cost of gas sold in revenue,” this allowed the net profit of Gazprom OJSC to increase by 88.6 billion rubles for the first six months. compared to the same period last year - up to 177 billion rubles. (which is comparable to the concern’s profit for the entire last year - 203 billion rubles according to the final report).
NOVATEK's revenue also increased over the six months. Moreover, despite the lack of access to gas exports, in approximately the same proportion as Gazprom’s. The company's revenues increased by 31.2%, to 23.7 billion rubles. The share of exports (oil, condensate and liquefied hydrocarbon gases) in sales has also changed noticeably - from 3 billion rubles. in the first half of 2005 to 9.9 billion rubles. for six months of the current year. However, the company's net profit fell quite sharply - by 1.4 billion, to 6.8 billion rubles.
At the same time, the cost of production did not increase at a very high rate - by only 18% (it increased by the same amount at Gazprom). The decisive contribution to the not very brilliant result for one of the leaders in capitalization growth among Russian companies was made by “other operating expenses”. In the first half of 2006, they were 30% more than in the same period in 2005 - 15.7 billion rubles. compared to 12.1 billion rubles.
In July, NOVATEK reported positive preliminary results of production activities in the first half of the year. Gas production by the group's enterprises reached 14.3 billion cubic meters of gas (an increase of 13%) and 1.27 million tons of liquid hydrocarbons (an increase of 17%).
Gazprom's subsidiary ZMB and the Austrian Centrex Europe Energy & Gas AG (which is considered affiliated with Gazprombank) established the ZGHG company to acquire a 50% stake in the British Saltfleetby field. ZMB's share in the new company will be 66.67%, the rest will be received by the second partner. The press secretary of the European holding company of Gazprom ZGG, Andreas Beldt, told AK&M about this. Currently, the license for the Saltfleetby field is owned by Wingas (a German joint venture between Gazprom and Wintershall). Once the deal is concluded, the field will be transformed into the second largest underground gas storage facility (UGS) in the UK, with a design active gas capacity of 0.75 billion cubic metres. “The ZMB company has decided that the most effective participation in the management of the Saltfleetby asset can be achieved in partnership with the Centrex company,” the Gazprom press service told Vremya Novostey.